top stories

Share

Derek Wanless

Comments from the Association of Chartered Certified Accountants
January 2002

Executive Summary

The Association of Chartered Certified Accountants (ACCA) is pleased to have this opportunity to comment on Securing Our Future Health: Taking A Long-Term View (the Wanless Report). These comments have been prepared in consultation with members of ACCA's Public Sector Technical Issues Committee. Many of the views in this response have also been informed by the work of ACCA's Health Service Network on healthcare services across Europe.

ACCA considers that healthcare spending should not be regarded as a problem for the Government. Rather, it should be treated as an investment. This is consistent with the vision emerging from healthcare bodies in Europe.

Four issues are especially important to ACCA:

• the amount of money needed over each of the next five years and twenty years
• the value for money achieved from the resources available
• the revenue spending needed for sustainable e-health
  and
• the downsides of constant reorganisations.

Each of these issues is dealt with in some detail in the next section. Issues of Particular Importance to ACCA

AMOUNT OF MONEY NEEDED OVER THE NEXT FIVE AND TWENTY YEARS

1. Over the last 40 years, funding for the NHS has grown by nearly 4% a year after taking inflation into account. Despite this level of funding, the NHS has fallen well behind the spending standards in comparable economies, for example France and Germany.
   
   
2. The Government recognises that the historic rate of growth of resources devoted to the NHS has not been sufficient. ACCA agrees with this view. We welcome the objective stated in the interim report to estimate the resources which will be required for the NHS in 20 years time. We suggest that this goal will be made easier if estimates are produced for each of the next five years and twenty years. We believe that the appropriate benchmark is the percentage of national income (GDP) which the EU countries will spend on healthcare over the next five years and twenty years. This is consistent with the Government's statements on NHS funding.
   
   Five Year View
   
   
3. ACCA believes that currently the share of GDP allocated to the NHS is not sufficient to match the quality and performance outcomes achieved by health services in other EU member states. The current NHS budget would have to increase by about 25% to reach the existing levels of healthcare investment in France and by about 40% to match the levels in Germany. We believe that these countries should be seen as providing effective healthcare standards to which the NHS should aspire.
   
   
4. In 2001, the Government recognised that further investment is needed in the NHS. Another £1 billion was added to the 2002/03 NHS budget, lifting the real increase to 7% compared to the previous financial year. We believe that this level of growth should be sustained over the next five years. This will ensure that NHS spending reaches the levels which were achieved in France at the end of the 20th century.
   
   
5. ACCA acknowledges that this would represent a significant move towards a more appropriate level of resources for UK health services. It believes, however, that this additional funding can be justified by three main factors:
   
   
   • the recognition in section 5.19 of the interim report that a low proportion of GDP allocated to health results in poor health outcomes
   • the provision in the NHS Plan for 20% more doctors and 10% more nurses by 2004
     and
   • the inadequate levels of capital investment and maintenance of NHS buildings over at least 30 years.
     
     
6. These factors mean that the NHS requires additional investment in its infrastructure. Using data from the interim report, ACCA estimates that the NHS estate suffers from a backlog in:
   
   
   • capital investment of at least £3 billion (see paragraph 8.72)
     and
   • maintenance of in excess of £3 billion(see paragraph 8.70).
     
     
   Twenty Year View
   
   
7. The proportion of GDP allocated to health in the EU has shown small steady annual increases. Our estimate is that by 2022 France and Germany will devote approximately 10% of their GDP to healthcare. We consider this to be a reasonable long-term objective for the UK.
   
   
8. ACCA estimates that annual increases in the real level of investment in healthcare of about 5% are needed for the period 2008 to 2022. This will enable investment in the NHS to match the estimated levels in France and Germany at the end of this period. Real annual growth of 5% or more was delivered on five occasions in the two decades to 1997.

   VALUE FOR MONEY FROM THE RESOURCES AVAILABLE

9. We believe, however, that extra money is only part of the solution. As we explained in our publication Health and Healthcare in the EU: a financial perspective, finance professionals now face the challenge ensuring that the following objectives are achieved in their trusts and health authorities:
   
   
   • additional real terms resources are devoted to improving quality
   • existing resources are managed more effectively and efficiently
   • cost control is maintained and improved in line with quality gains
     and
   • overall value for money is improved and sustained.
     
     
10. Each year since 1982, NHS managers has been expected to deliver efficiency savings. As a result, NHS executives, managers, healthcare professionals and subsequently clinical directors have spent much of their time trying to save money and balance the books. We believe that this pressure has limited the time and energy available for developing and enhancing the quality of healthcare services.
    
    
11. This needs a rapid shift in emphasis for NHS executives, including finance directors. They should develop and apply their skills to help to spend the additional money on effective modernisation projects which deliver better standards of healthcare. ACCA believes that this should include:
    
    
    • better trained staff
    • better technology
    • clear roles for hospital and primary care services
    • effective team work
      and
    • better facilities.

12. The higher levels of investment in healthcare services which we are recommending should help to reduce the current costs of sickness absence. These are estimated by the CBI to total £23 billion a year and include:
    
    
    • £11 billion a year as the cost to UK business of workplace absences
      and
    • £12 billion a year in statutory sick pay and welfare payments to the long term sick.

    REVENUE SPENDING NEEDED FOR SUSTAINABLE E-HEALTH

13. At paragraph 10.69, the interim report makes the point that "Delivering a high quality service with up-to-date technology matching standards in other countries will require more resources than have historically been made available for new technology in the UK". ACCA places high priority on investing in e-health and has applied its own resources to researching and supporting the skills needed in this area. We see e-health and modern patient and clinical information as a central element in the innovations needed to improve healthcare standards in the UK.
    
    
14. In these circumstances, levels of historic spending on technology should not be used as a plausible floor to what will be required in future. ACCA estimates that spending on IT should increase to 4% of NHS budgets by 2005. We also believe that further increases, to bring the proportion of the budget devoted to IT to around 6%, will be required by 2022.
    
    
15. We are not aware of any evidence which adequately explains the relatively low level of spending on information and communications technology per member of staff in the NHS. We therefore believe that the final report should include robust estimates of the level of additional funding which is necessary to ensure that the NHS is able to make appropriate levels of investment in this area.

    DOWNSIDES OF CONSTANT REORGANISATIONS

16. Approximately 80% of all reorganisations and mergers fail to achieve the targets set for them. The NHS is currently in the middle of yet another reorganisation. Whether this is really needed or not may be less important than the delay which it will create at a time when improvement is critical.
    
    
17. Maximum management effort should be focused on applying additional resources to healthcare improvement. We believe that the current reorganisation should be completed without delay and that the period up to 2022 should:
    
    
    • be free of further major reorganisations
    • enable healthcare professionals to change and improve the way in which they deliver healthcare
      and
    • allow the total focus of NHS management to be on achieving the changes needed to improve healthcare outcomes for patients.

Back to top